16 Money-Management Tips Every Retiree Needs to Memorize
Recently retired? "Most retirees are concerned with outliving their money," reveals financial adviser Mike Zaino. Here are his 16 top money-management tips for new retirees.
Make a budget
“Not only is this basic advice for all stages of your life, it may also be the most ignored!” warns Mike Zaino, president and CEO of TZG Financial in Charlotte, North Carolina. “You’ve spent your entire working life concentrated on the accumulation phase of building your nest egg. During retirement, the preservation and distribution phase becomes the focal point. You’re living on a fixed income, but your health-care expenses can vary greatly.” Mint.com and the mobile Mint app allow users to connect their financial accounts in one place to track and categorize spending, set up reminders to pay bills, make the payments, and check balances.
Map your social security strategy
When should you apply? The longer you wait to collect, the more you’ll receive each month. However, financial necessity may force you to start earlier. Says Zaino, “I advise all of my clients to get a complete physical when they retire. I’m talking the ‘poking, prodding, blood, urine, and sweat from making you run on a treadmill’ type of physical! You’re going to be making financial decisions that will affect the rest of your life, so you best know where you stand health-wise before making those decisions. If you’re healthy, have a history of longevity in your family, and can afford to postpone drawing your Social Security, each year you wait will add roughly 8 percent compound interest to your payment. Doesn’t sound like much? You could be leaving a couple of hundred THOUSAND dollars on the table.” Be prepared for the worst–this is what happens when you file for bankruptcy.
Use a retirement calculator
To avoid outliving your money, utilize a retirement calculator annually to project your savings in the future. Zaino points out, “Most people spend 40-plus hours every week earning their money, but less than one hour each week managing it.” Confused on where to start? Check out this timeline that shows you exactly how to save for retirement.
Reduce banking and investment fees
“Just because you’ve been paying high fees for years, doesn’t mean it’s right,” cautions Zaino. Compare your bank, credit card, and brokerage fees to other options. If you’re paying for checking, see if there are other local banks that will take your business without charge.
Take care of your needs before your children’s
“Sometimes, you have to say no,” says Zaino, a member of the National Ethics Association. “This is huge, especially for the ‘Sandwich Generation’ with aging parents and mooching children. Sometimes, a little tough love and encouragement can go a long way in establishing a child’s financial independence.” Get answers to 10 of your retirement savings and 401k questions.
Use the AARP app
Join AARP and use their app to stay informed of local events, benefits and discounts. Don’t feel compelled to buy their products before you comparison shop. Nevertheless, their dues are so low, it’s easy to come out ahead with their discounts and benefits.
Don’t jump into investments
Seniors are seen as easy prey for scammers. Any offer you’re told is only good if you give someone money today is likely a fraud. Warns Zaino, “If you have to decide today, the answer should be no.” Find out the 9 things that you didn’t realize could sabotage your retirement budget.
Put financial deadlines on your online calendar
Whether you use Google Calendar, Outlook, or another calendar program on your phone or computer, take the time to add important financial deadlines such as income tax filing and other milestones. Explains Zaino, “For example, your IRA distributions have to start by April 1 in the year following the year you turn 70.5. If you turned 70 in July of 2017, then you turn 70.5 in January of 2018, and need to take a distribution by April 1, 2019. If you turned 70.5 in June of 2017, then you have to file for your required minimum distribution (RMD) by April 1 of 2018.”
Devise a Medicare plan
Talk to friends and professionals to decide how to pick the Medicare plan right for your needs. On average, people with Medicare spend over $5,000 each year on out-of-pocket costs. Asks Zaino, “How healthy are you? If you’re going to the doctor three times a week, you may want to consider a Medicare supplement. If you’re not seeing doctors frequently, try Medicare Advantage.” Check out ways to get the most out of your Medicare plan.
Monitor your credit report
As the recent Equifax breach shows, our connected world makes it all too easy for hackers to get your personal information and steal your identity. Credit Manager is a free tool that lets you regularly check your credit report for fraud or mistakes and provides credit monitoring to keep identity thieves at bay.
Attack debt with the highest interest rate first
“Paying interest is a killer in retirement,” warns Zaino. “Allocate additional disposable income (over and above your minimum payment) toward paying off your debt with the highest interest rate in order to pay it off faster. Then once it’s paid off, continue paying that amount, in addition to the minimum payment on the debt with the next-highest interest rate, in order to get the second one paid off. If you have additional debt, continue to use this formula of stacking payment from previous debts on top of current debt to get yourself into a debt-free status.” Check out these 15 simple ways to earn extra retirement income.
Investigate a reverse mortgage
“If you own your home and none of your children have an interest in keeping it, then a reverse mortgage might be worth investigating, as it could provide you with an additional source of retirement income and monthly cash flow,” says Zaino.
Turn your credit cards into debit cards
Debitize is a service that monitors your credit cards and links to your bank account. When you make a credit card purchase, it takes the money out of your bank account just as if you had used a debit card. That means you’re still building credit and possibly racking up rewards while preventing you from spending money you don’t have. Find out the 13 retirement facts you need to take seriously.
The more you exercise, the better your health could be, reducing health-care costs. Fidelity projects that a 65-year old couple who retired in 2016 should expect an average cost of $260,000 over twenty years, and that excludes any nursing home costs. Instead of investing in a dedicated fitness-tracking device like a FitBit, it’s cheaper and more convenient to use a free app on your phone or smartwatch (which can also monitor your heartbeat) that will count your steps and monitor your workouts. Start with Google Fit (Android) or Health (iOS) for the basics, including counting steps, keeping track of your fitness goals and weight-loss progress. Both of these share data with more advanced workout and weight-loss apps.
Don’t be afraid to ask for help
Many government and local charitable programs designed to help seniors in need can be found through the National Council on Aging. Enter your zip code here to see what’s available in your area for assistance with housing, food, medicine, and more. Find out the 12 common mistakes to avoid when budgeting for an early retirement.
Stay informed on FinTech
New technology can help you control the money that you worked so hard to earn. When a grandson has a birthday, do you write a check, put it in the envelope, find a stamp, and mail it, hoping it gets there in time? Instead, download Venmo, the free digital wallet. Not only can Venmo send him the money instantly, but he will be impressed at how tech-savvy Grandma is!